Broker snap: Upside risk to Burberry forecasts, says Seymour Pierce

7th Nov 2012 10:20

Seymour Pierce has reiterated its 'buy' rating and 1,500p target price for luxury brand Burberry after a better-than-expected first half.Burberry reported a 6% growth in underlying profit before tax (PBT) to £173m, ahead of Seymour's £165m forecast. Meanwhile, the dividend was raised by 14% which shows "management's confidence in future growth," according to analyst Kate Calvert."This is a reassuring set of results and will help rebuild sentiment towards the shares after its unscheduled trading update in September. This came after a dramatic sales slow down in the industry, which then recovered towards the end of September," Calvert said."The market will welcome the news that bringing the fragrance and beauty license in-house will be broadly neutral to PBT in FY14, according to management, and earnings enhancing thereafter."Seymour Pierce now thinks that these figures mean that there is upward pressure to its own £390m full-year PBT forecast and consensus estimate of £400m."On our current numbers, the shares are trading [at 16.1 times full-year earnings] which we believe is undemanding for its long term growth prospects. [...] We still consider Burberry a strong long term growth story with significant geographical and product mix opportunities."Shares were up 0.56% at 1,259p in mid-morning trade.BC